Tepid response, court stay hit Karnataka solar auctions

Karnataka’s solar programme has received two setbacks in quick succession: its latest solar auction for 1200 MW has been postponed, while the results of an earlier one for 860 MW have been stayed by the Karnataka High Court.
Karnataka Renewable Energy Development Ltd (KREDL) invited bids for 1200 MW of projects at the Pavagada Solar Park in Tumkur district on January 31 this year, setting out dates through February on which various stages of the auction would be held. But on February 22, it issued a notice saying the earlier auction notice had been recalled and set fresh dates for the auction in early March.
The reason it had to do so was because hardly any developers responded. Azure Power and Shapoorji Pallonji, both of whom had put in bids for 100 MW at the auction, received identical notices saying the tender had been recalled “due to minimal number of responses”. It emerged that these two were the only ones who bid — seeking a mere 200 MW together — in the 1200 MW auction.
KREDL’s fresh auction announcement includes a long “addendum” which relaxes a number of the conditions set in the earlier tender, which suggests that it was these stiff conditions which restrained developers from bidding. While the earlier bid documents gave developers eight months to complete their projects from the date of receiving their letters of allotment (LoAs), for example, the new one provides 10 months’ time. Similarly, the maximum time allowed for achieving commercial operations before the developer’s performance guarantee is encashed has been extended from 12 to 14 months.
However, not all the concerns of developers have been addressed. “We did not bid in the Karnataka auction because the bid documents do not include the provision for tariff change if there is a change in law,” said Vikram Kailas, CEO and Managing Director, Mytrah Energy. With the Director General Safeguards having recommended 70% ‘safeguard duty’ on solar equipment imports and the Director General, anti-dumping, also conducting an enquiry into whether anti-dumping duty should be imposed on these imports, developers are worried that their input costs could go up sharply in the near future, thereby affecting their financials unless the tariff is correspondingly raised. About 90% of solar panels and modules used in Indian solar projects are imported, mostly from China.
At the same time, the earlier 860 MW solar auction held by KREDL on February 3 has come under a cloud with Grasim Industries — part of the Aditya Birla Nuvo Group — moving the Karnataka High Court against it, saying it had put in its bid and also paid the required deposit of Rs 10 lakh,but due to a technical glitch, its bid was never uploaded and thereby remained excluded from the shortlist of bidders. The auction for projects across 43 talukas of Karnataka saw 11 winners in all, with winning bids ranging from Rs 2.94 to Rs 3.54 per unit. Shapoorji Pallonji, Acme Solar and ReNew Power were the three biggest winners.
With the petition being admitted on February 8, five days after the tenders had been opened and results announced, the court directed KREDL “not to proceed further from the stage at which the tender process has reached as on today”.